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Meet Avicanna, The First Marijuana Company To Be Accepted Into Johnson & Johnson Innovation, JLABS @ Toronto

As a cannabis-focused company, Avicanna did not know what the outcome would be when it applied to be part of JLABS @ Toronto. Yet, the company was delighted to make it, CEO Aras Azadian and LATAM Vice President Lucas Nosiglia told Benzinga in a recent interview.

A few things became clear early in our chat. First, these guys know about entrepreneurship and overcoming adversity; this is not their first (nor second) successful venture. Second, they understand the value of what CanopyBoulder’s Micah Tapman recently defined as “authentic relationships” for success. Third, big things can be accomplished with relatively little money.

Getting MJ Into JLABS

The story of how Avicanna was accepted into JLABS @ Toronto starts with Azadian and Justin Grant, PhD, MBA, a member of the former’s Scientific Advisory Board, and the research program manager of the STTARR Innovation Centre with Princess Margaret Cancer Centre at the University Health Network, the largest cancer center in Canada. The idea of approaching JLABS @ Toronto popped up during a conversation between the two; although it seemed like a long shot, they went for it. They really trusted their vision.

As background, Johnson & Johnson (NYSE: JNJ) Innovation, JLABS @ Toronto is a 40,000-square-foot life science innovation center located in MaRS Discovery District. The labs provide a flexible environment for startup companies pursuing new technologies and research platforms to advance medical care. Through a “no strings attached” model, Johnson & Johnson Innovation does not take an equity stake in the companies occupying JLABS, and the companies are free to develop products, either on their own or by initiating a separate external partnership with Johnson & Johnson Innovation or any other company.

“Our first approach with them was very positive,” Azadian told Benzinga. “However, we knew they had never accepted any cannabinoid companies before.”

The CEO and his team explained that Avicanna is not just a cannabinoid company but a biotech company involved in the cannabis space.

The pitch was convincing, and the company made it through to the first phase of interviews.

“They understood the business; they understood the approach; they understood the leveraging of different regulatory frameworks in the U.S. and Canada,” Azadian added. All of this got them into another interview stage and, eventually, after several filtering instances, Avicanna was accepted to be part of JLABS @ Toronto.

“Companies at JLABS are at the leading edge of their field,” Rebecca Yu, heads of JLABS Canada told Benzinga. “Avicanna is focused on innovative approaches and technologies, and was selected into JLABS based on meeting our stringent criteria for demonstrating compelling and credible science or technology that addresses a significant medical or market need.

“Selection into JLABS does not infer any special investments or rights assigned to J&J, and our no-strings attached model offers entrepreneurial companies and technologies the ability to access a network of resources and similar stage companies to help them reach their potential,” she added.

New Company, Proven Product Line

Before moving on, it’s time to properly introduce Avicanna and what they do.

Coming from a biotech background, Azadian had not only an understanding of the industry, but also what he’s called an “incredible network.” So, he decided to leverage these assets and create a biotech company that was focused on cannabinoids and cannabinoid delivery mechanisms.

“What we noticed was, there is a lot of sophistication with respect to cultivation in Canada. However, due to the legal landscape, there are limitations with respect to what licensed producers can do for R&D on advanced delivery mechanisms,” he explained. “With respect to the American landscape, even though (in specific States) producers can make the products and retail them in the medicinal and or recreational markets, there are limitations with what the federal government and the FDA will allow to be done clinically.

“There are gaps in the medical cannabis industries of the two countries that are, in my opinion, spearheading the evolution of the cannabis industry at a global level. So, we decided to leverage off of those gaps and be a multinational company that has the R&D, the product development, and the IP with market acceptance in the U.S., but bring that into a context where we can clinically develop it – and even collaborate with the top medical institutions in Canada.”

One of the early steps was a strategic partnership with Scientus Pharma, a licensed dealer that allows Avicanna to address these gaps, to manufacture and clinically develop its product line. Soon after, the biotech company went after the intellectual property for transdermal delivery mechanisms like patches and creams, and a number of other products, branding it as PURA ELEMENTS.

“We are now in the clinical development phase,” Azadian continued, pointing out the company is currently conducting animal trials to understand the actual bioavailability and pharmacokinetics of our products “We are conducting a spectrum of studies including safety, toxicology, and bioavailability to better understand each particular product.”

This is a double-sided effort. On the one hand, Avicanna wants to prove the medical effectiveness of its products. On the other hand, they want to enhance them through diverse collaborations with scientists, research facilities and institutions. Ultimately, the idea is to develop different products, with diverse cannabinoid and release profiles, aimed at specific ailments.

How The Patch Works

Intrigued by how Avicanna’s patches, creams and tinctures work, Benzinga asked for an explanation. How long to they take to act? Do they get you high or stoned?

“The transdermal technology is an effective delivery mechanism as it avoids the first pass metabolism and smoking. Because of its slow release profile, the patient is avoiding an extreme surge of cannabinoids,” Azadian answered.

“I personally have used the patches. I found with the THC in our 30 mg patch had minimal psychoactive effect, which was incredible because I had the desired medical relief.”

A Multinational Focus

A very important element to Avicanna’s business model and plan is international presence: They want to be early entrants in multiple nascent medical marijuana markets such as Colombia, Switzerland, Germany, Spain, Chile, Brazil and Argentina.

“Since we first started with the venture, we’ve been noticing that companies, especially in Canada, are aiming at creating economies of scale for production, to prepare for the legalization of the recreational markets in 2018,” Nosiglia, who’s in charge of LATAM expansion, said. “Our model is lean and capex-low as we focus on strategic partnerships. We’ve managed to operate with our initial capital of C$1.6 million ($1.26 million) so far, leveraging our international networks to expand our footprint worldwide.”

So, what Nosiglia is working on right now is establishing the foundations to get into new markets as they roll out countrywide regulations beyond compassionate-use and exceptions in markets such as Argentina. Additionally, Avicanna has established a partnership in Colombia, which should allow them to cultivate and manufacture at a significant discount for local distribution and export.

“We decided to only raise what we needed and only tapped 40 strategic shareholders. The majority of them are investment bankers that are heavily invested in the industry or strategic investors, including ourselves – all of the founding partners have put in money as well. That was the first round,” Azadian concluded. “As we continue to progress and meet milestones we will be visiting future financing opportunities.”

Check back soon for part 2 of this article, where Nosiglia and Azadian will walk us through the largest opportunities in international markets. Why could Europe and Latin America prove valuable? What’s the problem with Spain? Are there opportunities left in Switzerland?